The pound has continued to crash against the Australian dollar with levels now sitting at a 3 year low. The strong rhetoric from Theresa May last week which suggests that Britain will follow the course of a hard Brexit has spooked the markets and is continuing to have a negative impact. The Flash Crash from Friday has only highlighted the kind of volatility we are seeing. This is unlikely to change too much from here on as there are effectively another 6 months to go before Article 50 is invoked and the process of leaving the EU commences. Clients selling Australian dollars are continuing to see an excellent opportunity to move into pounds and there may be a move lower to test below 1.60.
The next Bank of England meeting is on the 3rd November and this could create added volatility for the pound. There is a chance that there may be another interest rate cut and (or) Quantitative Easing which would be sterling negative. In my view an interest rate cut would be less desirable for the Bank of England to pursue but cannot be ruled out. Additional Quantitative Easing is more likely to be favored and which would also carry a risk for the pound.
Data is extremely light this week for both UK and Australian data so British politics will prevail. Clients who are buying or selling Australian dollars are continuing to see a very volatile period at the moment which is unlikely to change any time soon. The Brexit jitters are keeping the pressure on the pound. If you would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on [email protected]